Deutsche Bank is “well prepared” to meet a European Union leverage target under higher capital requirements, Krause said in an interview with Boersen-Zeitung published today. “We have to further reduce our balance sheet” and set aside profit, he said in the interview with the German newspaper. Klaus Winker, a spokesman for Frankfurt-based company, confirmed the comments when contacted by Bloomberg News by phone today.

Regulators are increasingly looking at leverage, in addition to measures based on risk weightings assigned to different assets, to gauge banks’ financial strength. The rules, which are at various stages of development in different countries, risk hurting investors as lenders will have to reduce assets or raise capital to comply.

Krause said that while the leverage ratio can serve in addition to capital requirements based on perceived risk, focusing on the former would push banks to load up on risk and reduce lending.

Deutsche Bank’s equity accounted for 2.8 percent of its assets at the end of March, the lowest value of Europe’s major banks after France’s Credit Agricole SA, data compiled by Bloomberg Industries show.

The German lender needs to raise 12.3 billion euros ($15.8 billion) in capital or reduce assets by 409 billion euros to comply with a proposal on leverage by the Basel Committee on Banking Supervision, analysts at JPMorgan Chase & Co. said in a July 4 note to clients.

Deutsche Bank wants to take “substantial steps” in the next year or two on selling assets from a 90 billion-euro portfolio that isn’t central to its business, Krause said. The company will have to reduce liquidity, which counts toward assets, and could pursue other measures, the CFO said.

The bank can also “achieve significant reductions without tangibly changing the balance sheet” as regulators make changes to howderivatives are accounted for, Krause said.

Krause told analysts on a conference call at the end of April that Deutsche Bank would improve its leverage ratio and focus on “balance sheet optimization” and efficiency.

The CFO told Boersen-Zeitung that he can’t yet say by what volume the company’s assets will decline.